Determining the change in income due to increased tertiary education

Abstract

The primary objective of this study is to determine whether the level of tertiary education has a positive and significant impact on the level of income received. This study will focus on determining whether each subsequent level of tertiary education causes an increase in the likelihood of earning a higher wage, by using a multinomial logistic regression model as well as cross-tabulation estimates. This study will also make use of two different data samples, where the first sample is sourced from the National Income Dynamics Study's, 2010-2011, adult wave 2 dataset, and the second sample is sourced from a questionnaire distributed to the North-West University's School of Economics alumni from the Potchefstroom campus. Literature indicates that there is a significant relationship between an individual's income and variables such as gender, age, marital status, population group, occupation, sector or industry, years of work experience, location of employment, tenure, union membership, and, most importantly, education. Determining the effect of these variables on the income of tertiary educated individuals, will assist current and future graduates by providing relevant South African labour market information as well as providing some assistance in decisions which may result in higher future earnings. From the NIDS data set, it was found that the level of tertiary education was significantly associated with income, and that higher levels of tertiary education were associated with higher income categories, while lower levels of tertiary education were associated with lower income categories. From the Alumni data set it was concluded that the level of tertiary education was not significantly associated with income, which could be the result of the graduation period (2009-2012) of the sample individuals. It was also found that married individuals were more likely to have earnings within the higher income categories, while the same result was obtained for males as well as for those individuals who were employed in the Gauteng province. It was also found that those individuals with an honours degree had earnings within the low income categories, similar to those individuals with a bachelor's degree. The main factors considered to influence the income of an individual with a tertiary qualification is gender, age, marital status, occupation, and the level of tertiary education.